How to Purchase GIC for Students in Canada?

Thinking of pursuing your studies in the Great White North? 

In order to qualify for a study permit through the government’s Student Direct Stream (SDS), you will need to have a GIC of at least 10,000 Canadian dollars as proof of funds. A GIC will also provide a guaranteed source of income and help you cover some of your expenses while studying in Canada. 

Learn more about how this investment works, how to purchase a GIC for students in Canada and why they make sense for international learners. We will also give you some tips on how to choose the right GIC student program for you.

What is a GIC for International Students?

A GIC is short for Guaranteed Investment Certificate. It is an investment product sold by almost all major banks in Canada that offers a guaranteed interest rate for a fixed period of time. 

When you buy a GIC, you are actually lending money to a financial institution and earning interest in return. The money will be deposited into your account each month, giving you a steady income stream and helping you pay for living expenses while studying in Canada. 

GICs in Canada usually lock away your investment for up to 10 years, however, GICs for students come with a one-year term during which you receive equal monthly (or bi-monthly payments) along with interest until the funds you invested are depleted. 

How a GIC for international students works

Buying a GIC is a simple and easy process completed in 6 steps. 

Before you arrive in Canada 

Step 1: Open an investment account 

Open an investment account (or Student Chequing Account) with any of Canada’s big banks by completing an application form online. You will also need to provide additional documents such as a letter of acceptance from a Designated Learning Institution (DLI).

If approved, you will receive confirmation in three business days, along with your account number and wire transfer details. 

Step 2: Fund the account 

The next step is to deposit funds in the account by wire transfer. You will need to send between CAD$10,200 and CAD$10,300. The money will be used to cover 

• Your GIC principal ($10,000)
• The bank’s handling or program fee (between $150 and $200, depending on the bank)
• Any wire transfer charges levied by third parties 

If your deposit is higher than all of these charges combined, the remaining funds will be transferred to your account and you can access them when you arrive in the country. 

The bank will provide you with an Investment Confirmation or GIC contribution details document, which you need to send along with other documentation and your application to the Canadian visa authorities in your home country. 

After you arrive in Canada

Step 4: Open a student/chequing account

Visit one of the branch offices of the bank and open a student or chequing account to set up your GIC payments. You will need to provide ID verification and sign the required contracts to activate the account. 

Upon arrival, you will receive an initial payment of $2,000 in your personal deposit account, while the remaining $8,000 (plus interest accrued from the GIC) will be invested into your GIC Program account as required by the Student Direct Stream Program.

Once you set up the account, you can continue using the same bank or have your account transferred to another Canadian financial institution. 

Step 5: Get paid

The GIC principal plus interest earned will be split into equal installments and paid out to you each month. 

How much interest you earn depends on the bank’s GIC rates (you can find the interest rates offered by major Canadian banks below or contact the financial institution directly)

Step 6: The term is completed

In one year, the GIC will mature. By that time, you will have received the $10,000 you invested plus any interest accumulated. 

Why do international students need a GIC?

Purchasing a Guaranteed Investment Certificate is mandatory for international students applying for a study permit through the Student Direct Stream (SDS)—a program that expedites the processing of study permit applications in Canada (usually within 20 calendar days as opposed to the standard procedure of up to 3 months). 

Even if you’re not applying for the SDS, you will still need to provide proof that you can support yourself financially. This does not necessarily mean that you have to invest in a GIC, although it is one of the safest and most convenient options. 

Here are some of the benefits of buying a GIC for studies in Canada. 

1. Earn interest on the money you invest 

Apart from GICs, the Canadian government also accepts other documents as proof of funds, including bank drafts that can be converted to Canadian currency, proof of scholarship or proof of student loan. None of these, though, let you earn returns—with a GIC you will not only get your principal back in monthly installments but also get paid interest on the $10,000 you invest. Depending on the GIC rate you choose, this could amount to $800 a month. 

2. Pay for your living expenses

Living in Canada is not cheap. In fact, it is estimated that Canadians pay an average of $200.51 for food a month and around $60 for electricity and other utilities. Making ends meet on a student visa is even harder, so you need all the financial help you can get. 

A GIC can help cover some of the costs of living in Canada by providing you with monthly income, i.e. the interest accrued from your GIC. Plus you will get the money in installments, rather than a lump sum, so it will be easier to manage your costs and income. 

3. Low-risk investment 

GICs are considered one of the safest investments since the return of the principal and the interest rate are guaranteed. In addition, your funds are insured with the CDIC or provincial insurance company. Thus, losing any money on GICs is next to impossible—making this financial product a great option for newbies to investing. 

4. Easy access to money

You will get an initial payment of $2,000 as soon as you arrive in Canada and set up your account with one of the banks in the country. This will help you pay for accommodation and initial expenses, thus getting settled in the country faster. 

What’s more, unlike investing in stocks or real estate, you can access the funds whenever you need to—GICs can be cashed out before the term is up (although you will need to pay an early withdrawal penalty). 

How to Choose the Right GIC for You?

Several of the biggest banks in Canada have an International Student GIC program that you can apply for. To choose the best one though you need to find a bank that 

• Offers competitive GIC rates 

As mentioned above, how much you earn in interest depends on the bank you choose. Rates typically range from 0.20% to 3%, which means you can get anywhere from $600 to $800 every month in regular payments. 

Though important, the interest rate should not be the deciding factor. When choosing an International Student GIC program, make sure the bank 

• Meets eligibility requirements

Not all banks can issue GICs to international students while some financial institutions offer GICs to residents of certain countries only. Before you apply, check if the bank is on the list of financial institutions that meet the criteria for the Student Direct Stream program. 

• Has a strong presence in Canada

To ensure easy access to your investment, look for a bank that has several branch offices in the province or territory where you will be studying. 

• Has a convenient refund policy

Your application might get rejected or you could change your mind about studying in Canada so it’s important to choose a bank that will give you your money back without any extra charges.

• Provides flexibility

Most banks pay out your installments every month, although some might let you set up a payment schedule to suit your needs. 

• Offers extra features

Most banks in Canada will provide additional benefits for foreign students opening a chequing or student account. For instance, Scotiabank offers mobile banking and credit card rewards through its StartRight Program, while TD offers Overdraft Protection and unlimited monthly transactions. 

• Has a wide range of financial products

Check out what other financial products the bank offers—you might need other financial services down the line, such as loans or credit cards. Instead of switching to a bank with better rates and offers later on, find the right banking institution before you open an account. 

Here is a quick overview of the GIC rates offered by some of the biggest Canadian banks. 

The Takeaway

A GIC can do more for you than just help you meet study permit requirements. It is a low-risk investment that earns you interest and can help you pay for living expenses during your studies. 

Before you apply though, carefully compare banks and financial institutions to find the best option for you—choose a bank that offers competitive interest rates, convenience and flexibility as well as a simple refund policy. By going with the right bank you will not only ensure that you are getting the most out of your investment but will also have one less thing to worry about while studying in Canada.